There are two things that can trigger a gargantuan tantrum from certain men; their football team losing, and the words: gender pay gap.
You see it all over social media: “there is no gap, stop sharing this narrative”. Except, the narrative isn’t made up, and new research proves it.
The ADP Research Institute has revealed that women’s salary increases are failing to keep up with men’s, with predictions that this trend will continue in the year ahead.
According to a survey of over 1,400 Australian workers, pay rises in the past 12 months averaged 5.7 per cent for men, compared to 4.4 per cent for women. In the next 12 months, it is projected that men will receive pay increases by an average of 6.3 per cent, compared to 5.2 per cent for women.
“Despite the ongoing discussions regarding the gender pay gap, this data demonstrates that the disparity continues,” said Managing Director ANZ at ADP, Kylie Baullo.
“This is particularly worrisome given the current economic challenges Australian workers are facing across all industries. People are grappling with genuine financial difficulties including the increase in utility prices and interest rates, and it is disheartening that women are not being paid in a way that enables them to contribute equally to household expenses.”
What is the gender pay gap?
The gender pay gap doesn’t mean that a woman and a man in the same role do not earn the same wage.
“The biggest misconception about the gender pay gap is that it’s the same as equal pay. And equal pay for equal work has been the law since 1969. The gender pay gap is different,” says CEO of the Workplace Gender Equality Agency Mary Wooldridge.
“Equal pay compares people who are doing the same or comparable job, whereas the gender pay gap looks at the average salaries across an employer or an industry, or even nationally. It takes into account not only pay levels, but also the composition of the workforce. So you might have equivalent pay at each of the levels, but if you’ve got a lot more men at the senior levels, and a lot more women at the junior levels, you can have quite a large gender pay gap.”
“There’s a big misconception, and I think some people don’t understand it, and some people choose not to understand.”
What is the gender pay gap in Australia as a percentage?
“It’s the average earnings of men and women over the average earnings of men. It’s the differential between the two as a percentage of men’s earnings,” Mary explains.
But, if you search for the gender pay gap as a percentage, you will find different figures. That’s because there are two different ways to calculate it.
“What varies is how you define earnings,” Mary explains. “There are different measures of the gap. One is the Australian Bureau of Statistics’ (ABS) average weekly earnings, which captures full time workers’ base salary. For that, the gender pay gap is currently 13 per cent.
“At WGEA, we think that it’s a more representative gender pay gap if you include all of people’s earnings, not just base salary, so things like bonuses, overtime, superannuation and one off payments. We also think it’s important to include part time workers in the calculation. For both of those areas, it tends to be in bonuses and extra payments, more senior people, and they tend to be men.
“By only using base salary, not total remuneration, you’re under-calculating the gender pay gap. Also, many more women workers are part time. So if you don’t include their incomes, and they tend to be lower paid, you’re also under-representing them. WGEA calculates a gender pay gap from the census that we do every year with employers. And we say that the gender pay gap is actually more like 22.8 per cent.”
The history of the gender pay gap
There’s a historical reason for this issue. Men have had a head start.
It was rare for women to take an active part in the workforce until WWII. With men off at war, the Australian economy needed women to work in traditionally male-dominated occupations – builders, factory workers, farmers, and machinery drivers.
During this time, there was a 31 per cent increase of female participation in the workforce, with 200,000 women adopting what was seen as a ‘man’s job’. However, these women were paid roughly two-thirds of the standard male wage.
Then came a fight for equality which saw women secure 75 per cent of the male wage in 1943. 26 years later, in 1969, they received equal pay for the same work.
So, all these years later, why is there still a gender pay gap in Australia?
Remember, the gap is based on average earnings. Women earn less than men on average due to a number of factors, but the three key drivers are discrimination, time out of workforce and our gender-segregated industrial structure.
“Women experience bias often from day one,” Mary explains. “In recruitment and promotions, in opportunities, and in the gender stereotypes that sit around women’s roles versus men’s roles.”
Time out of the workforce
“This is a biological requirement for a woman having children; but it often limits their capacity even if they want to return to the workforce or to participate fully in the workforce. We also still have a very gendered view that women are the ones who take on the caring role,” says Mary.
Our gender-segregated industrial structure
“We have masculinised industries that are high paying, like mining. And we have feminised industries that are low paying, like health care and social assistance,” Mary explains. “Our industries, and the jobs and roles that women take within them, are quite segregated along the gender line.”
While these three factors “manifest differently in different companies and industries,” they are the key components driving the gender pay gap.
What is Equal Pay Day?
Equal Pay Day refers to the number of days after the end of the financial year that women have to work to be paid the same as the average man. It differs among states and industries. This number is calculated by the WGEA through the ABS, using average weekly earnings data (of base salary only).
“The February 2023 average weekly pay for men working full time was $1,907.10. Women earnt $1,653.60 per week on average. That’s a difference of $253 every week and $13,183 every year,” as per the WGEA.
“At the average rate of pay for women, this is the equivalent of eight weeks additional paid work (56 days).”
“With the gender pay gap, we can talk about percentages and numbers, but the 56 days is a really tangible representation of that difference,” Mary tells us. “In times when cost of living is going through the roof and so many people are challenged in terms of making ends meet, that difference of $252 in your pay packet each and every week can make a really huge difference.”
How long will it take to close the gender pay gap?
According to ABS data, in the last six months the gap decreased from 13.3 per cent to 13 per cent. Decreases in all but two states, NSW and NT, drove the change. However, as recent research shows, the gap is not closing fast enough.
“There has been a reduction in the gender pay gap over the last 10 years, regardless of how you measure it,” Mary confirms. “But the pace of that reduction is quite slow, and we want to accelerate that ratio of change. I think we believe we’re a fair and equal society, but you have this big differential in the workplace.”
In terms of how many years it will take to close the gap, the WGEA CEO admits it’s practically impossible to calculate as there are many different measures.
“At current rates of change, it’s at least 25 years to close the gender pay gap. But there’s a lot of work to try and accelerate that.”
The good news? According to Mary, Australia is in the midst of a “proactive national debate around these issues”.
“They’re much more at the forefront of people’s minds,” she says. “From pop culture with the Matildas, Taylor Swift, and Barbie, through to the government making a commitment to be the best at gender equality in the world; we really have the environment to drive this change and to close the gap much faster.”
Indeed, in March 2023, a Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023 passed in parliament. This means that from early 2024 the pay gaps of employers with 100 or more workers will be published; this is to drive transparency and action.
In a government media release, the Minister for Women, Senator the Hon Katy Gallagher, said the Bill is a vital step in achieving economic equality for women.
“On current projections it will take another 26 years to close the gender pay gap. Women have waited long enough for the pay gap to close – this government will not let them wait another quarter of a century.”
What can we do to close the gap?
To close the gender pay gap, we first need to understand it.
“I think everyone has a role, depending on whatever perspective you’re coming from,” Mary says. “As a community and as individuals, we can improve the discussions we’re having, and ask questions in your workplace. Leaders in business and in workplaces can commit to identifying the causes of the gender pay gap and driving change to close that gap.”
Until now, there has been little to no transparency in gender pay gaps amongst different employers. Early next year, that’s set to change as the WGEA will be publishing this information. This is a big deal.
“An employer will suddenly know what their gender pay gap is. We’ll certainly know what their gender pay gap is,” she says.
“When you’re looking for a job, you can get some information about what your prospective employer is doing in relation to gender equality and, and how they’re performing, and make decisions in relation to it.”
“This happened in the UK a few years ago, and what they actually found is that some women were making choices to not take a job with companies with a high gender pay gap, or to go and work somewhere else – even if it was at a slightly lower salary.
“The gender pay gap is really a proxy for gender equality in that organisation, so the more information about a company, the better; then people can make conscious choices about where they want to work, and the environment that’s created for them for their careers.”